Zambian currency at record low after Lungu's illness
Zambia’s currency has retreated for a fourth day, weakening by 1.3% to 7.1014 kwacha to the dollar. The Southern African nation’s dollar bonds due in 2024 fell for a third day, pushing the yield up by seven basis points to 7.27%.
Lungu (58) has been in power for less than two months, after winning a narrow victory in early elections following the death of his predecessor Michael Sata in October. State-owned broadcaster ZNBC said he left Lusaka, the capital, on Tuesday for specialist treatment in South Africa after collapsing on March 8 at a stadium where people were celebrating International Women’s Day. The president’s collapse was caused by low blood sugar levels stemming from a rare stomach complaint, according to his office.
The South African Press Association reported that Lungu had joked about wanting to return alive to Zambia, saying: “Who wants to die?”
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SABC contributing editor Vuyo Mvoko and his film crew were victims of a mugging shortly before going live on air to report on Lungu’s arrival at Milpark Hospital in Johannesburg.
Lungu is trying to prevent the closure of copper mines or retrenchments as he faces a standoff over a new tax system with companies in Africa’s second-biggest producer of the metal.
Copper futures have fallen by their largest margin since January in New York.
The president’s illness will “raise political concerns during a very sensitive time for Zambian institutional credibility”, said Gareth Brickman, an analyst at ETM Analytics in Johannesburg, in an email to clients.
Zambian markets were closed during a holiday on Monday, the day after Lungu collapsed. But the president said in remarks broadcast on Tuesday on Lusaka-based Radio Phoenix that he was “feeling much better”.
Before his departure, Lungu removed two senior officials and set up a tribunal to investigate allegations of misconduct. Justice Minister Ngosa Simbyakula will take charge in his absence, according to an emailed statement from the presidency.
Zambia is to resume talks with the International Monetary Fund (IMF) this month, although it is not clear if a formal IMF program will be under discussion. The country’s economy likely expanded at its slowest pace in 12 years in 2014 as shutdowns limited mining production, according to the IMF.
Political and social pressure in favour of “loosening fiscal policy” before elections in 2016 is a potential risk, the Washington-based lender said.
The stronger dollar is also hurting the kwacha, First National Bank Zambia, a unit of South Africa’s FirstRand wrote in an email. “The kwacha has not been able to escape the global gloomy sentiments.”